Hurting small biz in name of saving it: The City Council's 'Jobs Survival Act' will be bad for mom-and-pop stores and others across New York, say commercial landlords

By Jeffrey Gural, Eric Gural and Brian Steinwurtzel

Oct 22, 2018 | 5:00 AM

Giving small tenants flexibility. (Eloi_Omella / Getty Images)

We are the largest owner and manager of small tenant office and retail buildings in New York City. Since 1952, our business has been renting space to small businesses. And we are absolutely convinced that the innocently named Small Business Jobs Survival Act under consideration at the City Council — which is actually a form of commercial rent control — would be terrible for neighborhoods throughout the five boroughs.

We are fortunate to have more than 2,500 businesses in our portfolio of over 11 million square feet. Our average size tenant is just over 4,000 square feet. Over one-third of our portfolio is leased to not-for-profit organizations — each of which gets discounted rent or a charitable contribution or both. We average over one million square feet of leases each year, or roughly 25 leases per month.

Advertisement

Of those leases, over 85% are tenants we renew. Those renewals often involve companies growing or shrinking the size of their space. In order to accommodate a company’s growth or contraction, we often have to relocate other tenants. We try to do this by moving them to neighboring spaces or other buildings.

The bill before the Council will prevent us from helping our tenants expand or contract as it will require us to keep existing businesses in place.

To fill our new projects and/or replace tenants in the 15% of spaces that don’t renew, we actively court established companies as well as entrepreneurs. We believe that moms and pops, and grandparents for that matter, and even the millennial dreamers can be a part of our portfolio. Often these companies have limited financial resources or experience or both — but we work with them because we know from experience that it’s worth taking a shot on those who believe in themselves. For example, the Huffington Post was founded in our portfolio and eventually grew from a small office to over 50,000 square feet.

If this bill were to pass, growing companies would be hard-pressed to choose New York City as their home as they won’t have the ability to expand quickly.

We know how easy it is to demonize landlords as bad guys in a city struggling with serious affordability pains. But we have been in this business long enough to know that flexibility and support are the greatest help we can give small businesses. Failure rates have been consistent for decades. In the 1970s and 80s it was suburban flight and urban blight. Twenty years ago, it was 9/11. Last decade, it was the financial crisis. Now, it is e-commerce.

This bill will increase vacancies, kill jobs, restrain ingenuity and ensure that companies like Google, Facebook and Peloton, which can locate outside New York City, leave New York City. It will ensure that growing companies won’t consider New York City because they will not be able to find space to grow. It will prevent landlords like us from taking risks on small businesses that may or may not succeed.

Rather than hyperbole, anecdotal evidence and misinformation, we recommend a rational conversation based on empirical data. Small business jobs are at record levels in New York City. In fact, employment here has never been higher. If the City Council wants to do something constructive, it should focus on initiatives that allow businesses to adapt to the pressures of e-commerce and the challenges of tomorrow.